Tag Archives: FLSA

Overtime Expansion is On Its Way

Obama is seeking to expand overtime eligibility, probably changing the rule this week. The upshot? Changing the rule will require employers to pay overtime to a larger number of salaried workers.

What’s the plan?

The White House is expected to direct the Labor Department to raise that salary threshold, though it is unclear by how much. Currently, the threshold is $455 per week, or around $24,000 per year.

Who will it affect?

Salaried workers, as those on hourly pay are usually already getting overtime pay. It would amend the implementation of the Fair Labor Standards Act and likely would require employers to pay time and a half for weekly work in excess of 40 hours by certain employees.

What’s the new threshold?

It’s not yet been released, but officials hint that it can be anywhere between $500 – $1,000 per week.

When will this take effect?

Not until after the Labor Department solicits comments on the new threshold. So put your checkbook away for now. But be prepared!

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Volunteers: The Latest Trap for Workplaces

Volunteers aren’t something most workplaces deal with, but if you have volunteers, as opposed to interns, watch out.

While the FLSA exempts volunteers who offer their services with no expectation of payment, a recent lawsuit from volunteers against Major League Baseball is claiming unpaid wages for their time.

I know. It makes no sense. You volunteer to help – meaning without pay – then sue for payment? Sure, MLB has money to burn, but you were a volunteer!

But now, changing the playing field, the Department of Labor (“DOL”) has proclaimed that an individual may not render services on a volunteer basis to a for-profit institution. Indeed, according to the DOL’s formulation, only “public agencies” may engage the services of a volunteer.

So, what does it mean to employers? Watch out when using unpaid labor of any sort. The courts are accepting these suits, and you don’t want to be caught in the crosshairs. Check with counsel before using unpaid labor, and err on the side of caution and pay minimum wage instead.

Read more at Forbes.com.

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Understanding Overtime Exemptions- Novartis to Pay $99 Million

Novartis has recently agreed to settle a $99 million lawsuit regarding unpaid overtime and wage claims. Their decision comes in the wake of appellate court decisions made in July 2010 and February 2011. In the July ruling, the U.S. Circuit Court of Appeals in New York ruled that pharmaceutical sales reps are not exempt from overtime, and in February of 2011, the U.S. Supreme Court refused to review the appellate decision which essentially finalized the ruling of the Supreme Court.

Exempt Employees and Overtime

Under the wage and hour laws passed by the Fair Labor Standards Act, employees must be paid overtime at a rate of time and a half for hours worked over 40 per week. The only exception to this rule is whether employees are exempt from overtime or not.

Novartis treated an estimated 7,000 pharmaceutical sales reps as exempt, and believing they had been improperly classified, the sales reps filed a claim in 2006. Now, six years later, Novartis President Andre Wyss says that they simply want to settle the case and move on.

Understanding Exemptions

The Novartis case is a fresh reminder that employers and HR professionals must be careful in determining whether an employee is considered exempt or not.

The guidelines for determine when an employee is exempt are found in the Fair Labor Standards Act section 13(a). Employees may be exempt if they are executives, administrative professionals or outside salespeople. However, the requirements indicate that an employee’s job classification alone isn’t sufficient to guarantee exemption, nor is the question of whether an employee is paid hourly or not. Instead, employers must consider the duties performed by the workers, the level of autonomy, how much time the worker spends away from the office, and what level of authority the worker has.

In the Novartis case, it was argued that the pharmaceutical sales reps were exempt under either the exception for administrative personnel or the exception for outside sales people. However, when the courts determined that since the reps were promoting products for Novartis rather than making a sale, they did not fall within the definition of outside sales people.  Further, because the sales reps were constricted in what they could say to doctors by Novartis’ detailed guidelines, they did not have the level of autonomy or independent decision making necessary to fall within the administrative exemption.

The Takeaway

The lesson learned from the Novartis case is that it can never be assumed that an employee will be exempt because of his job title or because he meets some characteristics of an exempt employee. Unless a worker falls within the clear parameters of the FLSA exemptions, it is best to consult with a legal professional for advice on what the employee’s true status is before considering the employee exempt. 

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Hurricane Irene and Employer FMLA Responsibilities

In the wake of Hurricane Irene, many employees are being forced to take time off of work to deal with injuries or property damage caused by the hurricane. Employers, in general, may be required to accommodate these requests for leave. Some businesses are or were forced to close temporarily due to the storm as well. The Wage and Hour Division of the U.S. Department of Labor outlines employer obligations in the wake of a national disaster like Hurricane Irene, providing background on the rules that apply to this and other natural disasters.

The FLSA and Natural Disasters

The Fair Labor Standards Act is one federal act implicated after a natural disaster. Under the FLSA, employers must be paid for all hours worked and must be paid time and a half for any hours over 40 hours worked in a single week. When a national disaster occurs, several different questions can arise as to what the FLSA requires of employers. The Wage and Hour Division outlines employer obligations in Fact Sheet #72 and specifies:

  • Employers who have records destroyed or who are closed in a natural disaster are still required to pay no less than the full minimum wage and overtime earned prior to the disaster. 
  • Employers are obligated only to pay for hours actually worked for employees who are not considered exempt employees. If a business closes due to a disaster, employers are not required to pay the hours that the employee would have worked had the disaster not occurred. Employees may be able to obtain unemployment or disaster unemployment assistance. 
  • For those employees considered exempt (salaried employees), they generally must be paid as normal if they are absent for less than one full week due to weather or other natural disasters forcing a business to close. When an employee keeps its business open during bad weather and an employee is absent, his salary should not be reduced due to this absence. 
  • No individual who volunteers to provide services after an emergency is considered an employee, whether the volunteer offers his time to a public agency or a private entity.

Family Medical Leave Act (FMLA)

The Family Medical Leave Act (FMLA) is another federal act that may be important in the event of an emergency o r natural disaster. Under the FMLA, employees are permitted to take as long as 12 weeks of unpaid leave for medical reasons, family reasons or because of a “qualifying emergency. The employee’s job must be protected during this time.

Handling Hurricane Irene

In the aftermath of Hurricane Irene or any other natural disaster, it is essential you comply with FMLA and FLSA laws and make sure employees are paid on time and given the leave they need.

Whenever possible, employers should also try to be understanding of the family and other obligations that arise in the event of a hurricane in order to foster employer/employee good will. This may mean making accommodations to allow employees to work more flexible schedules, to work from home or to make up missed time at a later date. Whenever accommodations can be made without great cost to your business, it is always best to exercise caution and show understanding.


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